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Telenor ASA ADR TELNY

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Telenor Returns to Organic Growth in Q2 but Sustainability Is in Question; Maintaining FVE

Javier Correonero Equity Analyst

Analyst Note

| Javier Correonero |

Narrow-moat Telenor returned to growth in second-quarter 2021 aided by Asian economies, mainly Pakistan and Bangladesh, which grew by high single digits adjusted for currency effects. A recovery in these economies was driven by the easing of restrictions but also came from easy comparable figures in 2020. However, there is no certainty about the sustainability of this trend in case a new COVID-19 wave hits, as Asian economies are laggards in testing and vaccinations and June already showed a deceleration in Telenor’s revenue growth in these geographies. In addition to this, currency fluctuations wiped out organic growth when translating it into Norwegian krone, as Asian currencies have strongly depreciated. Denmark and Finland also helped growth with mid-single-digit organic increases driven by upselling and mobile net customer additions. All this resulted in overall revenue (NOK 27.2 billion) growing 3.3%, adjusted for currency effects but declining almost 5% on a reported basis. Shares are fairly valued and we maintain our fair value estimate of NOK 159.

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Company Profile

Business Description

Telenor is an international provider of telecom, data, and media communication services with 183 million customers in 10 markets. It is the incumbent dominant telecom operator in Norway and the Norwegian government holds an almost 54% stake in the firm. Telenor also operates in other Nordic countries and is an established player in faster-growing emerging markets. Telenor owns both fixed-line and mobile networks, though fixed-line services (telephony, Internet, TV, data services) provide around 10% of service revenue. The firm’s fixed-line operations are in Sweden, Norway, Finland and Denmark. In the rest of its markets, Telenor offers only mobile services.

Contact
Snaroyveien 30
Fornebu, N-1360, Norway
T +47 67890000
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 19,000

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